Cristina Cordova was the 28th employee at Stripe and grew their partnerships arm from the ground up. Most recently, she led platform & partnerships at Notion, which included starting the Growth Product Team. Today, she invests in early stage technology startups as a Partner at First Round Capital.
Partnerships can be a powerful growth lever for startups. The problem is that it’s often a murky topic with a lot of nuance. In this abridged summary of Cristina’s interview on the Execs podcast, she shares her insights on identifying partnership opportunities, different types of partnerships, and how startups can successfully negotiate with larger organizations.
How startups can identify partnership opportunities
Zooming out and thinking about your overall product experience helps you understand where partnerships could add value. Cristina advises startups to focus on two things:
Customer base growth. What products are your current and future customers using? What other products and companies can help bridge you to new audiences??
During Cristina’s time with Stripe, the company’s core audience was programmers and developers. With Stripe’s aggressive growth goals, they realized they had to initiate partnerships outside of their initial “developer bubble” in order to expand their reach.
Product experience. When speaking to your customers, seek to understand the stack of services surrounding your product.
For Notion, Cristina’s looked at making sure that the product was working very well with other productivity tools and services that their customers were using. Partnerships allowed Notion to scale without having to build in-house integrations:
[With partnerships] we could say, "Sorry, we're not going to build that, but Zapier has a really great integration with that service, and you could hook something up really quickly if you want that integration."
Once you have a list of potential partners, you can prioritize and rank them based on the type of partnership you’d need to build.
Four types of partnerships
Partnerships can be grouped into four types, which relate to the role of partnerships in your overall business strategy.
#1 - Foundational partnerships
These are the partnerships that you might need because your product could not exist without them.
In Stripe's world, Cristina recalls the partnership with Wells Fargo, which was their banking partner for a very long time. Stripe wouldn't be able to move money without a banking partner, making this a priority partnership for the business.
#2 - Product partnerships
Product partnerships are like foundational partnerships, but they’re not so critical that your business could not operate without them.
Before Stripe had its own tax business, Cristina’s team set up partnerships with companies who could offer tax services to their customers. This allowed them to satisfy customer needs while they were still building their own product, which had an unclear timeline.
Cristina notes that even when Stripe wasn’t planning to build a certain functionality in-house, product partnerships still had value for customers. For instance, Stripe partnered closely with Apple Pay, despite having no plans to build phones or wallet software themselves. However, Stripe customers and potential customers might have those in their plans, so those businesses will need Stripe and Apple Pay to be integrated seamlessly.
#3 - Platform partnerships
Platform partnerships are when you’re building a suite of APIs, and you want developers and businesses out in the world to integrate with those APIs, so that your product and their product can work better together.
These can be very powerful. In Slack's case, their platform creates opportunities like a small business building a polling app that would go on to become the number one polling app on the entire service. It wasn’t a handcrafted partnership, but it was a partnership enabled by the platform. Then you also have companies like Google, who are building Google Meet plus Slack type integrations.
When you’re able to build an open set of APIs that anyone can build on top of, it can be a powerful unlock, provided you can achieve the necessary scale.
#4 - Distribution partnerships
Tracing the customer’s journey, you may identify other products or services that your audience encounters before they find you. These are the companies with which you should pursue distribution partnerships.
Cristina recalls how Stripe’s partnerships team needed to look outside their developer audience, which led them thinking about non-technical business owners like ecommerce store owners. These businesses typically don’t have in-house development teams, which means they would use something like Shopify or Squarespace to set up their online store. As online stores need to accept payments, it was a natural next step to begin setting up distribution partnerships with such companies.
How can startups partner with larger organizations?
Since most startups prize growth and distribution, Cristina notes that this will lead them to seek out partnerships with larger organizations,
She shares this caveat:
YC famously gives the advice of: early on, don't spend that much time on partnerships, particularly if you’re looking at bigger companies. They may end up wasting your time, or it’s a low priority for them. They can wait, but if you’re a startup, you can't wait.
To solve this paradox, Cristina advises to put yourself in the shoes of the person on the other side of the table.
If you don’t have a lot of customers, or don’t yet have meaningful traction, or no unique offering relative to the market, you have to face the reality that you don’t yet have anything of value to offer. So it doesn’t make sense for bigger companies to want to partner with you.
The right time to start spending energy on partnerships is when you can say: "Okay, a reasonable person on the other side of the table would say yes to me." Being honest with yourself at this point will lead to easier conversations.
If you try too early, you might fall into the “corp dev trap” – where you’re thinking about partnerships, but because of the power dynamics, they’re thinking about acquiring you.
In addition, Cristina also notes that economics are a common sticking point for startups dealing with big companies. Larger companies know their business metrics and models inside and out, whereas startups might not yet have a model they can confidently base a negotiation around.
We were flying blind for a lot of the deals that we were doing in the early days of Stripe and had to renegotiate those deals later.
You’re likely to make mistakes, which is why it’s critical to make sure that partnerships are a core part of your business, and to know what to expect as you go into a negotiation.
How to make partnerships go as smoothly as possible
Partnerships can take a long time and burn a lot of execution cycles. Cristina shares 3 lessons in getting partnerships to as smoothly (and as quickly) as possible:
#1 - Be clear on what's on and off the table
Do a lot of work up front. Before you engage, you have to be aligned internally on what the “hard yeses” and “hard nos” are.
Cristina says that a common mistake is to show that you’re flexible on some terms. Even by saying something seemingly harmless like “hmm, let me take discuss that with the team” could open new variables in negotiation which can slow down the process. By already knowing what’s off the table, you avoid having to figure things out in the middle of a partnership discussion.
For example, when companies set up a distribution partnership, they can agree to doing “co-marketing.” Cristina advises to be precise on what that means:
- When we say we’re going to do co-marketing, what specifically are we committing to?
- Are we going to do a joint podcast together?
- What about co-branded billboards?
- Are we expected to email our customers on your behalf?
Having a clear picture of what you want and don’t want avoids unnecessarily opening up new surface areas of negotiation that increase your cycle time.
#2 - Map out who else needs to be involved
When setting a partnership, Cristina maps the entire organization as soon as possible, so she can understand the stakeholders she’ll have to influence.
The biggest partnerships that I've ever done are never one person's decision. I'm convincing the BD person, a product leader, a CTO, and a number of other people that we're the right partner to work with.
For example, when it’s a major partnership, she makes sure that “my CEO and the other CEO are best buds.” Multithreading allows her to have multiple touchpoints throughout the organization, which makes her deal more resilient.
#3 - Empathize with the person you’re negotiating with
Cristina adapts her pitch and framing depending on the role of the person she’s engaging with. She seeks to understand things like:
- What is this person’s mandate?
- What are their objectives?
- What are they going to be praised for?
- What are their incentives?
- How are they compensated?
This helps increase her chance of success.
When I did a bunch of media deals, I would work with some people who did audience development, and so their primary objective was to just bring more traffic to the website … so that would change my pitch.
On the other hand, Cristina notes that a partnerships person in the business development team will likely be revenue-focused. If you’re a startup without a revenue-sharing model, you’re unlikely to make inroads with this person, and so you may consider changing your pitch, finding someone else in the org, or moving on to another company.
Non-obvious (but avoidable) partnerships mistakes
When startups are still early in the early days of their partnerships function, Cristina highlights a few common mistakes they’re likely to run into.
Data and customer ownership
An often-overlooked piece of partnership agreements is customer ownership.
Maybe you’re going to get customers through this partner, but that partner will not allow you to email those customers or use their email addresses. So you don’t have any opportunity to expand on your relationship with this customer.
Startups need to think about this upfront and understand what tradeoffs they’re willing to make. This is an easy one to miss as you set up the partnerships, but lawyers will catch this and force the discussion; it’s better to proactively know your stance so you can drive the conversation around it and not be caught off-guard.
Signing a long-term deal too early
Cristina acknowledges the difficulty in setting up things like revenue-share agreements when your startup doesn’t yet have a market-tested model, or the difficulty of negotiating with larger companies who have more leverage.
Her advice: don’t worry too much about the economics of this first deal that you sign. But the key is to not sign a long-term agreement.
The reason for that is if you blow up as a business in a year or two, but you have a five-year contract where you're working with this foundational partner and you're paying these egregiously high rates, you're putting yourself in a position where you have no ability to get out of it, and it can really hurt the business.
This goes back to Cristina’s earlier points around the strategic value of partnerships to your startup. You are likely to make mistakes, especially when partnering with more experienced teams who have done this multiple times before.
Give yourself a margin of safety by not agreeing to long-term agreements.
Cristina shares another angle to this: using tiers, so that as you scale, you get cheaper pricing. That way, if you scale, you know what to expect and can plan accordingly.
Partnerships are art and science
While partnerships are often the domain of contracts, precise language and legal approval, Cristina highlights that not all partnerships are worth a lengthy negotiation process.
Some partnerships are a little softer and more nuanced than others. There might be partnerships where you won’t feel a strong need to get a contract in place. So there, everything is implicit and nothing is explicit. You just have to be reasonable with those kinds of things and make it your job to be a partner that they want to continue to work with.
This is part of the murkiness and ambiguity that makes partnerships and business development deals so interesting and challenging. As you search for growth and impact, some things will come down to the specific context you’re dealing with, your assessment of the people on the other side of the table, and ultimately, your judgment.
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